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QUESTION
Assume that the nominal interest rate in Mexico is 48 percent and the interest in the United States is 8 percent for 1-year securities that are free...
IFE.Assume that the nominal interest rate in Mexico is 48 percent and the interest in the United States is 8 percent for 1-year securities that are free from default risk.What does the IFE suggest about the differential in expected inflation in these two countries? Using this information and the PP theory, describe the expected nominal return to U.S. investors who invest in Mexico.
